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Cold Chills US Gas Production In Shale Plays As Heating Demand Jumps

Cold weather gripping much of the United States is denting natural gas production in the nation’s shale patches, with output of the heating fuel down more than 20% since December in North Dakota’s Bakken region, according to analyst estimates.

The United States relies more on natural gas than coal for heating and has ramped up exports of LNG.

Flows of natural gas on interstate pipelines out of North Dakota dropped to about 1 billion cubic feet per day (Bcf/d) on Jan. 2, down from about 1.3 Bcf/d on Dec. 25, according to Genscape data. One Bcf/d is enough gas to fuel about five million U.S. homes.

“That drop is due to the freeze off we’re seeing,” said Andrew Bradford of BTU Analytics, an energy consultancy.

Natural gas production often can be affected by water vapor in pipeline systems freezing and hindering the flow of gas. Unlike crude oil, gas must be piped immediately to a processing facility.

The National Weather Service (NWS) issued wind chill warnings for much of the United States east of the Rocky Mountains on Tuesday.

In Hettinger, North Dakota, temperatures fell to -45 F (-43 C) on the morning of Jan. 2, one of the coldest temperatures recorded on the planet for the day, according to the NWS.

Continental Resources Inc., the second-largest producer in North Dakota, declined to detail the effect cold weather was having on its natural gas output, but said it did expect a drop.

Hess Corp. and Cabot Oil and Gas Corp., two of the largest natural gas producers and processors in North Dakota and Pennsylvania, did not respond to requests for comment.

The Genscape data relies on monitoring of interstate pipelines and does not take into account natural gas that may be used in state in power plants or for other uses. Texas and Oklahoma, for example, use most of their natural gas at facilities in state.

In Texas, natural gas transport on interstate pipelines is down about 20%. In Oklahoma, the drop is about 22%, and in Pennsylvania’s Marcellus Shale, the drop is about 5%, according to Genscape.

Natural gas demand in the lower 48 U.S. states is expected to reach an all-time high of 144 Bcf/d on Jan. 2, which would top the Jan. 1 record 142 Bcf/d, according to Reuters data going back to 2008.